“Tokens are the atomic unit of the Web3 and are collectively managed by a distributed ledger. They can be issued with just a few lines of code with a smart contract. Token contracts are rights management tools that can represent anything from a store of value to a set of permissions in the physical, digital, and legal world. They might affect the financial world similar to how the Internet affected the postal system.” (…) “Tokens are to the Web3 what websites were to the Web1.”

Cited from: “Token Economy, How the Web3 reinvents the Internet”

“If we assume that the WWW revolutionized information, and that the Web2 revolutionized interactions, the Web3 has the potential to revolutionize money, agreements and any type of social and economic value exchange. The Web3 consists of a set of protocols that are collectively managed instead of centrally managed, thereby changing the power structures and data structures in the backend of the Internet. Blockchain networks or similar distributed ledgers are the backbone of this Web3, introducing a universal state layer. The Web3 allows any Internet user to co-manage public Internet infrastructure, often by incentivizing network actors with a token.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (2nd Edition)

“Blockchain networks build on the idea of P2P networks. They collectively manage the state of all token transactions via a universal data set - the ledger of transactions. Every network participant can trust that data set, even though they might not know or trust each other, because immutable copies of the ledger are stored and managed on every node in the network. Economic incentives in the form of native network tokens are applied to make sure that all network interactions are fault tolerant, attack resistant, and collusion resistant. Network rules are encoded in and enforced by the network’s protocol.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (2nd Edition)

“Decentralized financial (DeFi) refers to a series of smart contracts that have been developed for the automatic settlement of financial transactions beyond simple payments networks such as P2P asset issuance, trading, lending and hedging. The term “DeFi” encompasses any decentralized and permissionless financial application that builds on top of distributed ledgers such as: (i) privacy-preserving payment systems (privacy tokens); (ii) stability preserving payment systems (stable tokens), (iii) P2P exchanges (token exchanges); (iv) P2P fundraising (token sales), (v) P2P credit and lending (decentralized lending), (vi) P2P insurance, and (vii) a growing list of P2P derivatives. These Web3-based DeFi applications could, potentially, open traditional financial services to the general public, mitigating current inefficiencies of financial markets.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (2nd Edition)

ReFi is a term that has been adapted from DeFi and refers to a series of tokenized projects and DAOs with the purpose to use the advantages of blockchain networks and tokenization to address a series of SDGs that intent to find solutions for climate change, support conservation practices or biodiversity protection, or by creating a more equitable and sustainable financial system.

Web3 applications can be used to create tokenized CO2 certificates that are publicly verifiable that are managed by a more transparent and cheaper settlement infrastructure for such certificates.

“…refers to the process of capturing carbon dioxide (CO2) from the atmosphere through geological or biological means. It is one method of many methods of reducing the amount of carbon dioxide in the atmosphere. The biological process can be induced by - for example - with changes in land use or agricultural practices. Crop land, especially monocultures, that are converted in land for non-crop growth of a diverse array of fast growing plants can contribute to a natural carbon capture process. The rates of photosynthesis via land-use practices can also be increased with reforestation and sustainable forest management. Dense forests with a strong biodiversity, including kelp beds and other forms of plant life can absorb CO2 from the air as they grow, and bind it into biomass. However it is important to keep in mind that such biological carbon stores represent a volatile form of carbon sinks. Long-term sequestration can only be guaranteed with continued carbon capture activities by plantlife and will be disturbed by events such as wildfires or diseases in wildlife and plantlife, which release the sequestered carbon back into the atmosphere.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (2nd Edition)

“Carbon offsetting refers to the act of funding the removal of carbon dioxide or other greenhouse gases that were generated in another geographical place. The unit of account that is used to measure the amount of carbon that is being reduced and offset is denominated in tonnes of CO2e (carbon dioxide-equivalent).”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (2nd Edition)

“Carbon accounting refers to processes defined to measure how much carbon dioxide equivalents an individual or organization emits. Such an accounting system helps to measure the amount of carbon emitted and reduced on both sides of a carbon market. Currently we have no public and global accounting system of who produces carbon emissions and who captures carbon emissions, but some institutions such as nation states, local communities and companies have already to quantify their carbon footprint calculations in so-called “national inventories” and “corporate environmental reports” and the adoption rate of such carbon accounting systems is growing. But these systems have not existed for a long time, and still need to be improved as they have their limitations - especially regarding measurement accuracy and trustworthiness. While the Paris agreement and other international treaties have started to create the conditions for such an accounting system and subsequent carbon offsetting markets, we are far from collecting global data, and rewarding all those individuals and communities who naturally contribute to carbon offsetting.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“The biggest factors that lead to an increased human induced emission of carbon dioxide results from burning fossil fuels such as coal, oil, or natural gas. The growing population density in urban areas is another factor. As densification of urban areas leads to the increased concealing of topsoil, biodiversity is lost and the temperatures in cities rise, which is why it is ever more important to protect the non-urbanized areas as much as possible. Rising global temperatures can also lead to more wildfires that again lead to the release of carbon that has been previously been captured by plantlife. The continuous growth of global trade and global travel also increases CO2 emissions, as both human travel and goods transport have a considerable CO2 footprint. Unsustainable agricultural practices such as an excessive use of fertilizers, monoculture farming practices as well livestock farming are another factor that increase the release of CO2 emissions.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“Carbon sequestration refers to the process of capturing carbon dioxide (CO2) from the atmosphere through geological or biological means. It is one method of many methods of reducing the amount of carbon dioxide in the atmosphere. The biological process can be induced by - for example - with changes in land use or agricultural practices. Crop land, especially monocultures, that are converted in land for non-crop growth of a diverse array of fast growing plants can contribute to a natural carbon capture process. The rates of photosynthesis via land-use practices can also be increased with reforestation and sustainable forest management. Dense forests with a strong biodiversity, including kelp beds and other forms of plant life can absorb CO2 from the air as they grow, and bind it into biomass. However it is important to keep in mind that such biological carbon stores represent a volatile form of carbon sinks. Long-term sequestration can only be guaranteed with continued carbon capture activities by plantlife and will be disturbed by events such as wildfires or diseases in wildlife and plantlife, which release the sequestered carbon back into the atmosphere.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“There is a growing ecosystem of carbon markets mainly divided into compliance driven markets and voluntary markets. On one side of the market are those who contribute to increased carbon emissions, on the other side are projects that reduce carbon emissions or capture or sequester Co2. The European Union Emission Trading Scheme - for example - is an compliance market where public and private institutions such as companies, local communities or nation states can buy carbon offsets in order to comply with mandatory and legally binding limitations (caps) of the amount of CO2 they are allowed to emit per year, given the international treaties they have signed. The failure to comply with these caps results in legal penalties. Voluntary markets offer individual, company, NGO, and even governmental organizations the possibility to buy carbon offset certificates when they wish to mitigate their greenhouse gas emissions. Companies often buy certificates from voluntary markets as a voluntary measure for their  “Corporate Social Responsibility” (CSR) reports or to receive better ESG (Environmental, social, and corporate governance) ratings. Voluntary markets are offered by a wide array of certification programs such as the Puro Standard, the Verified Carbon Standard, the Gold Standard, and the Climate Action Reserve.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“The type of project that is typically funded with the selling of CO2 certificates are projects that invest into the production of renewable energy (biomass, biogas, wind or hydroelectric) or projects that support the reduction of consumption (energy efficient electric devices.) Furthermore projects that contribute to the reduction of various types of agricultural or industrial pollutants such as landfill methane are also funded by carbon offsets. However, in recent years there has been a debate of the quality of carbon offset, which can vary greatly from project to project and also needs to be taken into account to avoid superficial greenwashing.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“Carbon offsetting systems today are still in their early stages and are faced with considerable transparency challenges. The current systems often suffer from information asymmetries and time lags regarding where the money flows and how the revenues are shared. Governments who fund many of the carbon emission and conservation projects want to avoid carbon bandits who double or triple sell carbon offsetting certificates. Another challenge of “pure” carbon offsetting markets is that they provide a “Carbon centric” solution that does not automatically resolve other interconnected sustainability issues. Pure carbon offsetting systems do not prevent natural biodiversity destruction or wildlife crime.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)

“Carbon offsetting is only one of many targets in the global attempt to fight biodiversity loss, climate change, soil erosion, etc. Environmental sustainability is one goal next to several other interdependent sustainability goals such as social sustainability and economic sustainability. The Sustainable Development Goals (SDGs) were born at the United Nations Conference on Sustainable Development in Rio de Janeiro in 2012. The objective was to produce a set of universal goals that meet global challenges. The Sustainable Development Goals are organized into 17 goals, which cover 169 more detailed targets. The goals cover social, environmental and economic aspects, and they often influence each other which means that they cannot be dealt with in isolation.”

Cited from: “Token Economy, How the Web3 reinvents the Internet” (3nd Edition)